Here is the Stipulation [PDF] and the signed Order [PDF], whereby the court makes it official that the three remaining patent counterclaims have been dropped by IBM, on stipulation of the parties, without any admissions as to the merits of the claims. That leaves 11 IBM counterclaims.

You'll notice that in the stipulation, it says that the parties stipulate to dismiss the claims with prejudice. And in the Order, it says the claims are "dismissed with prejudice and upon the merits, with each party to bear its own costs and attorneys' fees related thereto."

So what does it mean? Is it a contradiction that the Stipulation says there is no admission as to the merits of the claims and the Order says it is dismissed upon the merits? And why with prejudice?

I wasn't sure, so I asked Marbux, and then I did some research myself, and here's the explanation I came up with. The short answer for any Type A's is that it is just the way the rules work for a voluntary dismissal after a certain point in a case -- it is placed in a category of "adjudicated on the merits" and the "with prejudice" part is so that IBM doesn't have to pay SCO's legal fees. They each pay their own regarding the patent counterclaims.

Don't forget, there has been a hearing already where matters involving the patent counterclaims were argued, so each side had to pay their lawyers to prepare for and handle that. SCO even hired a patent expert, as you'll recall. IBM naturally has no desire to pay that fee for SCO, and if you opt for asking the judge for an order of dismissal without prejudice, IBM's other option, you can end up having to pay the other side's legal fees on the dropped claim. Here's an explanation of Rule 41, and particularly the legal fees aspect, and P stands for plaintiff:

4. P seeking dismissal without prejudice may be required to bear the full cost of litigation to date, including the adversary attorney's fees (Rule 41(a)(2)). But such condition may not be imposed on P seeking to dismiss his claim with
prejudice.

Now, for those who want the long answer, so they can verify, I'll take the time to share what I learned in more detail, because of an article that quotes RedMonk analyst Stephen O'Grady, who talks about the value of education in the context of a new group formed to spread information about OpenDocument Format, and, in passing, he mentions Groklaw as an example:

"The Open Document Format
itself is not something to be sold to end users; they need to
buy rather a product that supports that format.

"But these consortiums can do an excellent job of aggregating
the information that can help illustrate why the format is
important, and therefore I think they do have value. One only
has to look at the impact Groklaw has had on SCO Group's
anti-Linux efforts to appreciate the value of education,"
O'Grady said.

In the Federal Rules of Civil Procedure, the rules that tell you procedurally what you can and can't do in federal court, there is a Rule 41, Dismissal of Actions, and it sets forth how an action or a claim or counterclaim gets dismissed. You could probably write an article on each sentence. Law is complicated, but I stopped researching once I was clear I had the general idea.

You'll see that a claim or an entire action can be dismissed, depending on the circumstances, in a number of ways. The first way is where the plaintiff just drops it on his own initiative, and he can do that if he does it before the other side has answered or brought a summary judgment motion. The second way is that the parties can stipulate to drop a claim later on. Third, the judge can do it, either because a party asks him to, or on his own initiative, if a party messes up.

Rule 41 addresses whether you can just drop a claim any old time, as often as you like, and walk off, or if the defendant gets to object, and precisely when you can walk away and when you can't. It also makes allowance for certain types of mistakes, such as filing your complaint in the wrong court.

Laws and rules of the court are usually not usually based on hypotheticals. They are written for specific situations that really happen. Imagine you are served in litigation. You go to the expense of hiring a lawyer, find the evidence your lawyer needs to write up an answer with counterclaims, and then the plaintiff just walks away, saying he changed his mind, leaving you with a legal bill, a perceived wrong, and no way to proceed on your counterclaims. Rule 41 addresses such scenarios, because people have done such things. And the rule lays out for everyone what each party can do and what the judge can do. Here are the details of Rule 41, with explanations in colored text inside brackets:

[ Rule 23 says the court must approve any settlement dismissing a claim or an action in a class action lawsuit, and 66 is about receivers, who also can't drop a claim or an action without a judge's approval.]

and of any statute of the United States,

[This covers any other law that they didn't list, but presumably a settlement also can't break any law; for example, SCO and IBM can't agree that IBM will drop the patent counterclaims on condition that SCO's executives commit hara-kiri in the public square.]

an action may be dismissed by the plaintiff without order of court(i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs,

[If you file a stupid lawsuit and then wake up sober and want to just drop it, or you realize you filed in the wrong court, or whatever, you can file a notice of dismissal, if your intended defendant hasn't answered your complaint yet or hasn't filed a summary judgment motion. You don't need the court's leave to do this.]

or (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action.

[After the other side has responded, now you need their agreement or an order of the court. IBM chose stipulation of the parties (remember that in its counterclaims, IBM is the plaintiff). It was too late for (i), because SCO had responded already to IBM's counterclaims.]

Unless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice,

[Without prejudice means you can bring the claim again. This makes sense if you think logically. Rule 41 assumes that if there is a dismissal *against* a plaintiff's wishes, it is presumed to be on the merits, but if it's the plaintiff himself who wants to drop it, the dismissal is voluntary and not on the merits (without prejudice). The parties or the judge can say otherwise, and in this case, IBM has, agreeing to drop the counterclaims *with* prejudice, so this is the end of those claims. Aside from the money issue, not wanting to risk having to pay SCO's legal bills, this indicates that IBM really doesn't want to be bothered with patent counterclaims in this case. It is possible that SCO wouldn't sign the agreement unless it was "with prejudice" but my guess is IBM doesn't care anyway, because they don't need them and don't have any intention of using them now. It was IBM's idea to drop them. You don't use nukes against a flea.]

except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.

[Here's a case where that happened, for the curious, but it doesn't apply to the IBM situation.]

(2) By Order of Court.

Except as provided in paragraph (1) of this subdivision of this rule, an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper.

[This is another way to achieve a dismissal. You can ask a judge to order it. The "upon such terms and conditions" phrase is the scary part, where the court can decide you have to pay the other side's legal fees, making a stipulation between the parties, as here, and with prejudice, an appealing option.]

If a counterclaim has been pleaded by a defendant prior to the service upon the defendant of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court.

[This is specifying what happens if the plaintiff wants to drop the whole thing, but the defendant has filed counterclaims and doesn't want to drop them. Rule 41 protects the defendant's right to proceed. The judge can't just sweep the counterclaims under the rug and dismiss them when the defendant wants to go forward. Here's a case where something like that was at issue.]

Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.

(b) Involuntary Dismissal: Effect Thereof.

[This is another way dismissals can happen, against a party's will, by a judge just making the decision. Next come some reasons that can lead to a judge dismissing.]

For failure of the plaintiff to prosecute

[Here's a case where the court did dismiss for such failure. And if you think SCO has been dragging its feet, here's a case where neither party made a move for six years, leading the court to rule as follows, and I think you will be able to relate:

CONCLUSION

The present civil case has been languishing in the court system for nearly a decade. There is no excuse for this case taking so long to come to trial. This is precisely the type of case that should be dismissed for want of prosecution. We should not condone the delay of counsel in the handling of cases. Our civil justice system is not run for the benefit of attorneys, but is designed to swiftly and fairly resolve citizens' disputes. Actions in defiance of common sense, like inexcusable delay, diminish respect for the ability of that system to resolve disputes and dispense justice. . . . There is little wonder citizens are upset with our justice system when a civil matter takes a decade to resolve.]

or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant.

[This is talking about the situation where a plaintiff brings an action, but then disappears or doesn't go forward diligently or doesn't comply with the rules or an order of the court in some extreme way, in which case the defendant is not left swinging in the breeze. He or she can bring a motion asking the court to dismiss the claim or the action.]

Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits.

[If you just made a mistake, you usually won't be punished by having a court say you lost your chance. Here's a case that points out, in footnote 3, that if your case is dismissed for lack of jurisdiction, it doesn't bar you from bringing your case, with the same claims, in the correct court.

(c) Dismissal of Counterclaim, Cross-Claim, or Third-Party Claim

The provisions of this rule apply to the dismissal of any counterclaim, cross-claim, or third-party claim.

[This is IBM's category, dismissal of counterclaims.]

A voluntary dismissal by the claimant alone pursuant to paragraph (1) of subdivision (a) of this rule shall be made before a responsive pleading is served or, if there is none, before the introduction of evidence at the trial or hearing.

[This sets forth how long you have to voluntarily dismiss a counterclaim, cross-claim, or third-party claim. A cross-claim is where two plaintiffs bring claims against each other, or just one way, or two defendants, instead of against the other party. Just because someone sues two people, that doesn't mean the two co-defendants are on the same side or have common interests in the litigation. Of course, a cross-claim has to have some relationship to the original subject matter. Here is a cross-claim.

A third-party claim is one brought by a defendant against someone the original plaintiff isn't suing at all. You see that in personal injury cases a lot. Let's say you hire me to fix your leaking roof. I slip on the shingles, which are substandard and unusually slippery, after tripping on some tools left up there by the chimney sweep you hired who, after he fixed your chimney, went home but left his tools behind. I fall off the roof and break my back. I sue you, wanting you to pay my medical bills. You say, it's not my fault. The roofers should pay you, because they put slippery, substandard shingles up there and caused your injury. The roofers say it's the chimney sweep's fault. His tools made you fall. He should pay your medical bills, not us. I don't care which one pays, so long as someone does, so you, the roofer, and the chimney sweep duke it out and the court decides which one pays or how much each pays me, assuming I can prove the shingles were hazardous and the tools were really left up there in a way that caused me to fall, I didn't contribute to the accident by any negligence on my part, and I did actually break my back.]

(d) Costs of Previously-Dismissed Action.

If a plaintiff who has once dismissed an action in any court commences an action based upon or including the same claim against the same defendant, the court may make such order for the payment of costs of the action previously dismissed as it may deem proper and may stay the proceedings in the action until the plaintiff has complied with the order.

[This says the court has the discretion to order the plaintiff to pay the costs of the dismissed action, if the party brings the same claim against the same defendant. This doesn't apply to IBM, because they opted for "with prejudice," so they can't bring the claims again, period. But here is a case where the fact pattern can be seen in action.]

Why all these rules? Because sometimes folks bring harassment lawsuits, just to annoy or to compel the other side to have to spend time and money to defend themselves, or just play games in litigation. Let's say someone did that to you, and you spent thousands of dollars to file a motion for summary judgment or an answer with counterclaims, and then the plaintiff says, in effect, "Only kidding. I want to quit now." If you read the notes on Rule 41, which explains why the wording was chosen as it was and tracks changes to the rule through its history, you can see the legislation was drawn up with such scenarios in mind.

Speaking of playing games, the phrase put in the stipulation that there is no admission as to the merits of the claims means SCO can't say it won anything, to use an extreme and silly example. The parties simply agreed not to litigate those counterclaims.

So, that part of the saga is over, the litigation is simplified, and hopefully it will speed things up in discovery a bit, not that it's easy to get SCO to hurry up. But at least they can't slow things down with those three patent counterclaims.